| Wed 24 Aug 2011, 7:05 | | HYP - Hyprop Investments Limited - Unaudited results for the six months ended 30 |
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HYP
HYP
HYP - Hyprop Investments Limited - Unaudited results for the six months ended 30
June 2011
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1987/005284/06)
Share Code: HYP ISIN: ZAE000003430
("Hyprop" or "the company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
Net income growth from shopping centres 9,7%
4% increase in interim distribution per combined unit to 181 cents
NAV excluding deferred taxation R58,68 per combined unit up 2,9%
Acquisition of Attfund Retail completed
Statement of comprehensive income
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2011 2010 2010
R`000 R`000 R`000
Revenue 563 851 527 770 1 119 048
Investment property income 497 891 464 009 984 910
Straight-line rental income accrual 8 400 3 106 14 148
Listed property securities income 57 560 60 655 119 990
Property expenses (185 725) (165 578) (371 932)
Net property income 378 126 362 192 747 116
Other operating expenses (19 314) (17 766) (36 044)
Operating income 358 812 344 426 711 072
Net interest (63 760) (59 697) (121 554)
Received 2 731 3 682 7 006
Paid (66 491) (63 379) (128 560)
Net operating income 295 052 284 729 589 518
Non-core income 449 449 905
Change in fair value 273 520 311 207 586 121
Investment property 284 537 187 257 517 262
Straight-line rental income accrual (8 400) (3 106) (14 148)
Listed property securities 8 345 120 525 75 430
Derivative instruments (10 962) 6 531 7 577
Amortisation of debenture premium 61 690 54 547 110 810
Amortisation of financial guarantee for
associate 357 953
Income before debenture interest 630 711 651 289 1 288 307
Debenture interest (300 665) (289 037) (593 024)
Net income before share of income from
associate 330 046 362 252 695 283
Share of income from associate 8 314 7 701 55 201
Investment property income 8 196 7 715 15 518
Straight-line rental income accrual 118 (14) 320
Change in fair value of investment
property 39 363
Profit before taxation 338 360 369 953 750 484
Taxation (76 250) (67 668) (147 496)
Profit for the period 262 110 302 285 602 988
Abridged reconciliation - headline
earnings and distributable earnings
Net income after taxation 262 110 302 285 602 988
Debenture interest 300 665 289 037 593 024
Earnings 562 775 591 322 1 196 012
Headline earnings adjustments (271 145) (191 008) (489 099)
Change in fair value of investment
property (net of deferred taxation) (209 455) (136 461) (378 289)
Amortisation of debenture premium (61 690) (54 547) (110 810)
Headline earnings 291 630 400 314 706 913
Distributable earnings adjustments 9 171 (110 526) (114 137)
Change in fair value of listed property
securities (net of deferred taxation)
(7 177) (103 652) (64 870)
Change in fair value of derivative
instruments 10 962 (6 531) (7 577)
Deferred taxation (2 037)
Amortisation of financial guarantee for
associate (357) (953)
Share of income from associate (118) 14 (39 683)
Attfund transaction costs 5 504 983
Distributable earnings 300 801 289 788 592 776
Total combined units in issue 166 113 169 166 113 169 166 113 169
Weighted average combined units in 166 113 166 113 166 113
issue 169 169 169
Earnings per combined unit 338,8 356,0 720,0
Headline earnings per combined unit 175,6 241,0 425,6
Distributable earnings per combined
unit 181,1 174,5 356,9
Distribution details
Total distribution for the year 181,00 174,00 357,00
Six months ended 31 December 183,00
Six months ended 30 June 181,00 174,00 174,00
Statement of financial position
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2011 2010 2010
R`000 R`000 R`000
Assets
Non-current assets 11 617 170 10 914 955 11 303 054
Investment property 9 797 910 9 099 758 9 481 454
Building appurtenances and tenant
installations 20 087 19 785 21 237
Investment in associate 210 407 171 021 210 055
Derivative instruments 3 371 2 127 13 227
Loan receivable 47 782 47 901 47 813
Listed property securities 1 537 613 1 574 363 1 529 268
Current assets 175 504 113 682 154 331
Derivative instruments 1 197
Receivables 130 066 78 972 86 584
Cash and cash equivalents 44 241 34 710 67 747
Total assets 11 792 674 11 028 637 11 457 385
Equity and liabilities
Share capital and reserves 5 664 305 5 101 492 5 402 195
Liabilities
Non-current liabilities 5 675 497 5 495 990 5 578 633
Debentures and debenture premium 2 386 205 2 504 158 2 447 895
Long-term loans 1 570 000 1 451 437 1 490 000
Derivative instruments 23 415 21 111
Financial guarantee for associate 596
Deferred taxation 1 695 877 1 539 799 1 619 627
Current liabilities 452 872 431 155 476 557
Payables 152 207 131 061 172 570
Derivative instruments 11 057
Combined unitholders for distribution
300 665 289 037 303 987
Total liabilities 6 128 369 5 927 145 6 055 190
Total equity and liabilities 11 792 674 11 028 637 11 457 385
Net asset value per combined unit(R) 48,46 45,79 47,26
Net asset value per combined unit -
excluding deferred taxation liability
(R) 58,67 55,06 57,01
Abridged statement of changes in equity
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2011 2010 2010
R`000 R`000 R`000
Balance at beginning of the period 5 402 195 4 799 207 4 799 207
Total comprehensive income for the
period 262 110 302 285 602 988
Balance at end of the period 5 664 305 5 101 492 5 402 195
Abridged statement of cash flows
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2011 2010 2010
R`000 R`000 R`000
Cash flows from operating activities (68 863) 11 612 62 608
Cash generated from operations 290 921 342 539 735 963
Interest received 2 731 3 682 7 006
Interest paid (66 491) (63 379) (128 560)
Distribution to combined unitholders (303 987) (277 409) (566 446)
Income from associate 7 963 6 179 14 645
Cash flows from investing activities (34 643) (55 901) (112 423)
Cash flows from financing activities 80 000 (98 563) (60 000)
Net increase in cash and cash
equivalents (23 506) (142 852) (109 815)
Cash and cash equivalents at the
beginning of the period 67 747 177 562 177 562
Cash and cash equivalents at the end
of the period 44 241 34 710 67 747
Financial results
Segmental Overview
30 June 2011 30 June 2010
Business segment Revenue Distributable Revenue Distributable
earnings earnings
R`000 R`000 R`000 R`000
Canal Walk 202 905 146 493 185 786 134 795
The Glen 85 830 54 855 75 123 50 401
Hyde Park 73 409 46 019 65 518 41 800
The Mall of Rosebank 51 106 35 864 48 475 31 098
Stoneridge 28 974 13 414 23 557 10 430
Southcoast Mall 10 395 5 731 10 993 7 136
Shopping Centres 452 619 302 376 409 452 275 660
Offices 21 365 13 414 21 243 13 661
Hotels 23 907 (3 518) 33 314 9 176
Investment property 497 891 312 272 464 009 298 497
Listed property
securities 57 560 57 560 60 655 60 655
Straight-line rental
income accrual 8 400 8 400 3 106 3 106
563 851 378 232 527 770 362 258
Fund management expenses (13 916) (17 831)
Net interest
(paid)/received (63 760) (59 697)
Net operating income 300 556 284 730
Non-core income 449 449
Share of income from
associate 8 196 7 715
Straight-line rental
income accrual (8 400) (3 106)
Total 563 851 300 801 527 770 289 788
Hyprop has declared an interim distribution of 181 cents per combined unit, an
increase of 4% on the distribution for the comparable period in 2010.
Hyprop`s quality shopping centre portfolio achieved strong growth during the
interim period, with like-for-like revenue and distributable earnings up by
10,5% and 9,7% respectively.
Affected by severe trading conditions in the hospitality sector, hotels
underperformed and recorded a net loss for the period.
Property expenses increased by 12,2%. Excluding municipal expenses, property
expenses increased by 5,4%.
Total arrears in the portfolio at 30 June 2011, comprising normal arrears, legal
cases and outstanding tenant deposits, improved to R32 million (31 December
2010: R41 million). Total provision for doubtful debts was R18,5 million (31
December 2010: R15,7 million).
Property Portfolio
Business segment Value attributable Value per
to Hyprop square
metre
Rentable June 2011 Dec 2010 June 2011
area R`000 R`000 (R/m2)
(m2)
Canal Walk 150 394 4 800 000 4 556 000 39 895
The Glen 74 583 1 546 706 1 535 433 27 593
Hyde Park 36 894 1 316 000 1 277 000 35 670
The Mall of Rosebank 37 009 948 000 918 000 25 615
Stoneridge 50 241 436 500 407 700 9 653
Southcoast Mall 29 361 132 500 129 500 9 026
Shopping Centres 378 482 9 179 706 8 823 633 29 254
Offices 22 221 332 000 331 000 14 941
400 703 9 511 706 9 154 633 28 460
Hotels 222 000 271 000
Investment property 400 703 9 733 706 9 425 633 29 014
Development property 81 248 # 73 674#
Listed property securities 1 537 613 1 529 268
Investment in associate 210 407 210 055
400 703 11 562 974 11 238 630
# Rosebank Gardens - directors` valuation
Investment Property
Old Mutual Investment Group: Property Investments (Pty) Limited updated the
valuations prepared by them at the previous year-end to determine an independent
valuation of the Hyprop portfolio at 30 June 2011.
Investment property increased in value by R308 million to R9,7 billion, a 3,3%
increase. The valuation of hotels declined as a result of reduced income.
Vacancies at 30 June 2011 were 3,9%, the same level as at 31 December 2010.
Developments
Planning for redevelopment of The Mall of Rosebank and Rosebank Gardens is
progressing, with pre-letting well underway. The majority of town planning
requirements have been completed with final approval expected in September 2011.
Subject to obtaining the requisite approvals, the project is anticipated to
commence in 2012.
Listed Property Securities
Income from Hyprop`s investment in Sycom Property Fund ("Sycom") was down by 5%,
reflecting Sycom`s continued underperformance in its office portfolio.
The investment in Sycom was valued at R1,5 billion at 30 June 2011 based on the
closing price of R20,80 per unit, resulting in a write-up for the period of R8,3
million.
Vunani Property Investment Fund ("VPIF") listed on the JSE on 11 August 2011.
Pursuant to the listing, Hyprop sold 50% of its interest in VPIF, realising R100
million and reducing Hyprop`s interest to 11,5%.
Borrowings
Net borrowings of R1,57 billion equate to a gearing ratio of 13,2%.
The average interest rate on long-term loans is 9,29% (2010: 9,37%).
Net asset value
The net asset value per combined unit ("NAV") at 30 June 2011 was R 48,46,
representing a 2,5% increase on the NAV of R47,26 at 31 December 2010.
Excluding deferred taxation, NAV at 30 June 2011 was R58,67, a premium of 7,7%
to Hyprop`s closing combined unit price of R54,50 on 30 June 2011.
Attfund Retail
As previously announced, the effective date of Hyprop`s acquisition of 100% of
the shares in Attfund Retail will be 1 September 2011.
Hyprop will issue 92 million new combined units as part settlement of the
Attfund Retail purchase consideration, with the balance of the purchase price to
be settled in cash. Up to 30 million of the consideration units ("the placement
units") may be placed in the market within 60 days of the effective date.
The extent of the placement will depend on market demand. If any of the
placement units cannot be placed at a price of at least R54 per unit Hyprop can
either make good the difference or repurchase some or all of the placement
units, resulting in increased gearing and fewer units in issue. Excluding the
effect of possible additional debt raised to repurchase all or a portion of the
placement units, Hyprop`s gearing post implementation of the Attfund Retail
transaction is anticipated to be approximately 27%.
As the 92 million consideration units are being issued ex the entitlement to any
distributable income earned prior to the 1 September effective date, Hyprop
unitholders will be paid a special distribution for the two months ending
31 August 2011. Details relating to the amount and salient dates in respect of
the special distribution will be announced in due course.
Also as previously announced, Hyprop has concluded an agreement with
Fountainhead Property Trust to dispose of Attfund Retail`s 25% interest in
Centurion Mall for R751,5 million. The effective date of this disposal is 1
September 2011.
Directorate
Pieter Prinsloo was appointed to the board as CEO effective 1 May 2011.
Having turned 70, Roy McAlpine retired from the board effective 30 June 2011.
The board thanks Roy for his many years of service and valuable contribution to
the company.
Louis Norval and Louis van der Watt will be appointed to the board as non-
executive directors effective 1 September 2011, being the effective date of the
Attfund Retail acquisition.
Prospects
The Attfund Retail acquisition will strengthen Hyprop`s position as the leading
South African listed shopping centre fund, with a diverse, high quality
portfolio of sizable shopping centres.
Focus for the immediate future will be to extract value from the Attfund Retail
acquisition. In line with Hyprop`s strategy to focus on large, regional shopping
centres, attention will also be given in the year ahead to the disposal of non-
core assets.
Based upon current trading conditions, the board anticipates an improvement in
distributions for the second six month period ending 31 December 2011. This
forecast has not been reviewed or reported on by Hyprop`s auditors.
Payment of debenture interest
Distribution 47 of 181 cents per combined unit for the six months ended 30 June
2011 will be paid to combined unitholders as follows:
September 2011
Last day to trade cum distribution Friday, 16
Combined units trade ex distribution Monday, 19
Record date Friday, 23
Payment date Monday, 26
Unitholders may not dematerialise or rematerialise their combined units between
Monday, 19 September and Friday, 23 September, both days inclusive.
Basis of preparation
This interim report has been prepared in accordance with International Financial
Reporting Standards, the AC500 Standards, International Accounting Standard IAS
34 `Interim Financial Reporting` and the Companies Act.
The accounting policies applied are consistent with those applied in the most
recent audited annual financial statements.
These results have not been reviewed or audited by the company`s auditors.
On behalf of the board.
MS Aitken PG Prinsloo
Chairman CEO
24 August 2011
Directors
MS Aitken* (Chairman); PG Prinsloo (CEO); LR Cohen (FD); EG Dube*; KM Ellerine*;
L Engelbrecht*; MJ Lewin*; DH Rice*; S Shaw-Taylor*; M Wainer*; LI Weil*
(* Non-executive Independent)
Registered office
3rd Floor, Hyde Park Corner, Jan Smuts Avenue, Sandton, 2196 (PO Box 41257,
Craighall, 2024)
Transfer secretaries
Computershare Investor Services (Proprietary) Limited, Ground Floor 70 Marshall
Street, Johannesburg (PO Box 61051, Marshalltown, 2107)
Company secretary
Probity Business Services (Proprietary) Limited
Sponsor
Java Capital(Proprietary) Limited
Investor relations
Envisage Investor & Corporate Relations
www.hyprop.co.za
Date: 24/08/2011 07:05:37 Produced by the JSE SENS Department.
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